My CD Just Matured and Rates Have Dropped. Should I Roll It Into Bonds Instead?

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A maturing CD in a falling rate environment is one of the most common fixed income crossroads investors face. You locked in a rate, the CD delivered, and now the renewal rate is meaningfully lower than what you earned. The question of whether to roll into another CD or shift into bonds is worth examining carefully because the answer depends on your timeline, your income needs, and where rates are likely to go next.

The instinct to chase the highest available rate is understandable, but it can lead to duration mismatches that create problems later.

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When interest rates are falling, existing bonds with higher coupons become more valuable because new bonds are being issued at lower rates. This means that bonds purchased before a rate decline can be sold at a premium in the secondary market, or held for their coupon income that now exceeds what new issuances offer. A CD,

Fuente original: Yahoo Finance (https://finance.yahoo.com/markets/options/articles/cd-just-matured-rates-dropped-230107840.html)